bumpy Posted May 13, 2011 Share Posted May 13, 2011 (edited) In the NS&I terms and conditions (section 15) it gives the following calculation for your interest. Value of certificate at end of year is V x B/A Where V = starting value B = RPI at end A = RPI at start So if the year starts with 5% RPI and ends with 5% RPI then I make it they pay you V x 1 which is no index linked value at all. What am I doing wrong. Edited May 13, 2011 by bumpy Quote Link to comment Share on other sites More sharing options...
righttoleech Posted May 13, 2011 Share Posted May 13, 2011 You should be using the actual RPI numbers (based on 100 in Jan 1987) from http://www.statistics.gov.uk/downloads/theme_economy/rp02.pdf e.g March 2010 to March 2011 is 232.5/220.7 which gives 1.053, (5.3% inflation) for the year Quote Link to comment Share on other sites More sharing options...
bumpy Posted May 13, 2011 Author Share Posted May 13, 2011 You should be using the actual RPI numbers (based on 100 in Jan 1987) from http://www.statistics.gov.uk/downloads/theme_economy/rp02.pdf e.g March 2010 to March 2011 is 232.5/220.7 which gives 1.053, (5.3% inflation) for the year Perfect answer. Thanks very much. FIO I spent 20 mins waiting on the NSI phone line, then they could not explain it in the way you did and told me to write in. Idiots Quote Link to comment Share on other sites More sharing options...
gandalf081 Posted May 13, 2011 Share Posted May 13, 2011 I think a few people are still confused by this issue looking at other forums : Take this scenario: I take out a certificate and RPI is 5% when i take it out. Exactly twelve months later RPI has dropped to 3%. Do i now only receive 0.5% as the level of RPI has dropped ---- or do i receive additional interest as though it has dropped it is still up 3% year-on-year. The answer to this would make the situation clear i think. Quote Link to comment Share on other sites More sharing options...
mkil Posted May 13, 2011 Share Posted May 13, 2011 RPI isn't 5% or 3%, increase in RPI is 5% and 3% in that example. Say the RPI index was 100 in January 2011 and 103 in Jan 2012. Increase in RPI is 3%. Using the formula in the first post assuming £100 invested. £100 x (103/100) = £100 x 1.03 = £103 Quote Link to comment Share on other sites More sharing options...
adamLancs Posted May 13, 2011 Share Posted May 13, 2011 I think a few people are still confused by this issue looking at other forums : Take this scenario: I take out a certificate and RPI is 5% when i take it out. Exactly twelve months later RPI has dropped to 3%. Do i now only receive 0.5% as the level of RPI has dropped ---- or do i receive additional interest as though it has dropped it is still up 3% year-on-year. The answer to this would make the situation clear i think. I think people get mixed up between RPI and inflation. RPI stands for Retail-Prices Index and not Retail-Price Inflation. It is NOT measured as a percentage, but as a continuous weighted-average number which goes up if prices have risen, stays the same if prices are unchanged, and goes down if prices are lower. It is a measure of inflation in prices, but is not in itself inflation. NS&I Index-linkers pay the PERCENTAGE CHANGE in the RETAIL-PRICES INDEX over the previous year OR ZERO PERCENT (whichever is greater), + the small bonus for that year. When people say RPI is 5% they should really be saying the CHANGE in the RPI, as RPI is just a number like the FTSE for example, and is not a percentage! Quote Link to comment Share on other sites More sharing options...
scottbeard Posted May 18, 2011 Share Posted May 18, 2011 I think a few people are still confused by this issue looking at other forums : Take this scenario: I take out a certificate and RPI is 5% when i take it out. Exactly twelve months later RPI has dropped to 3%. Do i now only receive 0.5% as the level of RPI has dropped ---- or do i receive additional interest as though it has dropped it is still up 3% year-on-year. The answer to this would make the situation clear i think. You'd get a total of 3.5% Quote Link to comment Share on other sites More sharing options...
davidcameron Posted May 19, 2011 Share Posted May 19, 2011 Just shows some people are too stupid to look after their own money. It's not exactly rocket science. Quote Link to comment Share on other sites More sharing options...
crash2006 Posted August 6, 2011 Share Posted August 6, 2011 (edited) http://www.devon.gov.../economyrpi.htm 2011 229.0 2010 217.9ok, its like this you open the index link account 1 jan 2010 you get paid interest base on the difference between jan 2010 and jan 2011 so (229.0/217.9) * you investment=1.0509* investment plus .85. the question, or you can do it like this (229.0-217.9)/ 217.9 = .0509 Edited August 6, 2011 by crash2006 Quote Link to comment Share on other sites More sharing options...
crash2006 Posted August 6, 2011 Share Posted August 6, 2011 (edited) You'd get a total of 3.5% No, you could get 4.9% +.05 it counts all the months not just the start or end. but its calculated differently that's all, its almost like take the average inflation rate for that year. to get 3.5% payment you would need start month to be 5% 3 months at 3% and 8 months at 3.5% to get 3.5%. Edited August 6, 2011 by crash2006 Quote Link to comment Share on other sites More sharing options...
crash2006 Posted August 6, 2011 Share Posted August 6, 2011 In the NS&I terms and conditions (section 15) it gives the following calculation for your interest. Value of certificate at end of year is V x B/A Where V = starting value B = RPI at end A = RPI at start So if the year starts with 5% RPI and ends with 5% RPI then I make it they pay you V x 1 which is no index linked value at all. What am I doing wrong. it depends, if jan01 =5% and jan 02 = 5% but feb to dec = 6% you'd get 5.9%. Quote Link to comment Share on other sites More sharing options...
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